ECB Officials to Markets: Chill a While and Let Our Actions Take Effect

European Central Bank officials were out in force Friday explaining the bank’s decision Thursday to take extraordinary measures to stimulate the euro-zone economy and boost inflation.

They largely stuck to the themes from ECB President Mario Draghi‘s press conference Thursday. The ECB was unanimous in choosing to adopt a negative interest rate on bank deposits–a first for such a large central bank–and making hundreds of billions of euros in targeted, cheap loans available to banks at four-year maturities. Officials are committed to preventing inflation–currently 0.5% annually–from staying too low for too long.

The common message for financial markets Friday from ECB officials: we’ve done a lot; we’re open to doing more; but chill out for a while and check back in with us later in the year to see if more is required.

“If the situation doesn’t improve, the central bank can do more,” Belgium’s central bank governor Luc Coene said, adding that it would make sense to wait until the end of the year to “see how the economy reacts to this relatively large injection of liquidity.”

That point was echoed by the head of Germany’s central bank, Jens Weidmann. “Now we have to wait and see” what the effects of Thursday’s measures are, Mr. Weidmann said in an interview with German daily Bild. He said it would be “absurd” to begin speculating on what the ECB’s next moves may be.

The plea for patience makes sense given how the ECB designed its latest stimulus measures. Of the multi-faceted package only the rate cuts and suspension of weekly bank-funding drains take effect quickly. The first loans under the new targeted lending plan won’t be available until September. The ECB said it would “intensify preparatory work” related to purchases of asset-backed securities. That will likely take several months at least.

Still, the ECB’s number two official, Vice President Vitor Constancio, kept the door open to large-scale asset purchases–known as quantitative easing–as Mr. Draghi did on Thursday.

A program of asset purchases is “still on the table,” Mr. Constancio said in an interview with CNBC.

Officials largely reiterated Mr. Draghi’s comment Thursday that, when it comes to interest rates, “I would consider having reached the lower bound today.” Thursday’s cuts brought the ECB’s main lending rate to 0.15% and the deposit rate to -0.1% from zero.

“I do believe that for the foreseeable future interest rates have reached the quasi lower limit,” Austrian central bank Governor Ewald Nowotny said in Vienna, although Mr. Constancio said some of the rates could still be tweaked.

One thing is clear, interest rate increases are unlikely until far into the future, meaning the ECB will likely start tightening well after the Federal Reserve and Bank of England.

“I think we can rather talk about years than months,” Ardo Hansson, who heads Estonia’s central bank, said in an interview on Estonian television. “At the moment we see no threat yet that inflation would start increasing significantly.”

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